Best and final: which offer to take?

[ktw]

May 5, 2021 19:00:25 GMT -5 Susie said:

May 5, 2021 17:00:52 GMT -5 ktw said:

This is exactly how I felt in the fall. Selling in a sellers market should not have been as hard as it was. In the end, it worked out ok, and we made an astounding amount of money, so it was worth it. But, so stressful. Everyone asks me if building a house is stressful - it’s really nothing compared to what selling was.

Any chance it will appraise high enough given recent comps? I was worried ours wouldn’t. The buyers didn’t tell us what it appraised for, but it was enough.

Our agent thinks it will appraise, but she was overconfident about the appraisal on our purchase so I don't trust it.  She thought it'd be no problem, and it came in $15k shy of contract price (although $5k above asking).  So it's hard to trust.  I fully expect the same scenario to happen here, landing in between asking and contract price.  Problem is, that's a $25k range, and we had 5 people offer within that range.  How tf do you pick between offers when nobody actually means the price they offer?

I'm so tired of thinking about it, stressing about it, and talking about it and going round and round about this stupid appraisal issue.

Hoping your agent is right in this case. The good news is that if it doesn’t appraise out and you can’t reach an agreeable settlement with your current buyers, in this market and with the number of offers you got, there will be other buyers. In our case, our realtor kept telling us it would work out, and it did. BUT, I know that’s only slight consolation right now when you’re in the thick of it and facing closing on your new place, and I’m sorry for the stress.

The school thing is so crazy to me. I’d be willing to bet a decent amount of money that what the registrar tells you in April/May about next school year could certainly be VERY different from what they know in August, but, again, I know it’s of little consolation when that’s what he/she is telling you now and it’s on the table to worry about. Hang in there!

[aspentosh]

Oh man, I am so sorry. Fingers and toes and everything crossed that the appraisal blows waaaaay past the contract price so you don't have to worry about it.

[simpsongal]

Dang, this is eye opening. So the offers didn't include all this appraisal contingency nonsense in their initial offers? That just seems like dishonest gamesmanship....

[Susie]

May 6, 2021 9:28:47 GMT -5 simpsongal said:

Dang, this is eye opening. So the offers didn't include all this appraisal contingency nonsense in their initial offers? That just seems like dishonest gamesmanship....

Agree.  All the offers are standard form contracts, with standard price offer.   Then these shenanigans show up in attorney review about adding a contingency making the price a function of appraisal.  It's impossible to actually compare offers when they change so much in attorney review.

H and I talked about it more last night, and I recalled that in this specific case, I don't think we can accept the buyer's proposed contingency.  Buyers wanted a contingency that they could cancel if the house appraised for <$345k.  However, since they were buying with a VA loan, there is already a VA/FHA funding addendum that is inconsistent with their requested term.  On its face it's even more favorable to them -- they can walk if it appraises < the $350k contract price.  We were assured it was "just a required form," they didn't want to walk, the agents discussed the buyer's ceiling on contributions, and we all anticipated they were good for their $5k deposit + another $5k if needed, so that a $340k appraisal would give net to sellers of $350k, or an appraisal of $335k would mean net to sellers of $345k.  We were good with that.  Then the attorneys step in, and that whole conversation no longer appears to be in good faith, if they are trying to negotiate for cancellation if it appraises <$345k.

This is the clause, C&P'ed, required for all VA loan contracts:

--

FHA/VA AMENDATORY CLAUSE

It is expressly agreed that notwithstanding any other provisions of this contract, the Buyer shall not be obligated to
complete the purchase of the property described herein or to incur any penalty by forfeiture of earnest money deposits or
otherwise unless the Buyer has been given in accordance with HUD/FHA or VA requirements a written statement by the
Federal Housing Commissioner, Department of Veterans Affairs, or a Direct Endorsement lender setting forth the
appraised value of the property of not less than $***(contract price)***. The Buyer shall have the privilege and option of
proceeding with consummation of the contract without regard to the amount of the appraised valuation. The appraised
valuation is arrived at to determine the maximum mortgage the Department of Housing and Urban Development will
insure. HUD does not warrant the value nor the condition of the property. The Buyer should satisfy himself/herself that the
price and condition of the property are acceptable.

--

Putting our lawyer hats on, with that addendum required to be in the contract, I don't see that any of us can insert a contingency for walking if it appraises for a different number ($345k).  I felt better about that language when it was just a "required addendum" vs. being specifically negotiated, KWIM?  Not that it changes the meaning, but I perceive their intent differently.  

H is supposed to have a call with their attorney today.  We've realized that we're probably going to run into this issue (contracting for an appraisal contingency) with any buyer, because it seems to be "a thing" now.  Because of the VA issue in this specific case, we're just going to try to contract for a right of opportunity to cure the issue/redeem the contract by lowering the sales price to meet appraisal (or function of appraisal) because at least that insulates us from having buyers unilaterally walk, leaving us holding the bag.  We're kind of giving up on the price, which makes me really angry.  I mean why did we pick these buyers to begin with?

Maybe the appraisal will come in ok.  Maybe it'll be higher than, e.g., our $335k offer.  It's not going to come in at $350k+.  The comps just are not there, there's no point in hoping.  But hopefully the gap is small and we can just sell the damn house and end this frustration.

I'm so sad that our time in this house has such a bad ending, and I'm so pissed that we're stuck with covering the problem on both purchase and sale ends.  

I'm also very tired of every meme on social media about how great it is to be a seller right now, with all cash buyers, etc.  Like what am I doing wrong that this is not my experience?  I keep trying to think about what the new house offers, but in this moment I have a lot of regret over this whole process.

[kadams767]

I know you are pressed for time now so this probably won't help now, but can you order your own appraisal so you have a better idea of what # you are going to be looking at when buyer's appraisals come back? They are "only" a few hundred dollars and could give you some peace of mind and the ability to negotiate better (or find a different buyer, even, though I recognize going back to the drawing board is really undesirable right now).

[simpsongal]

Susie, I'm sorry. This is actually helpful to hear b/c my mom is selling a house soon and we expect a fair amount of buyers w/VA loans.

[purplepenguin7]

I'm so sorry Susie, this does sound extremely tough to navigate. I've been following your experience because I am hoping to sell and buy in the near future. I think lilac05 had a great point, that there been much written about the hundreds and showings and many offers buyers are getting in this market but nothing that truly covers the process from attorney review to closing. I bet this happening a lot more than is being let on. I feel like I want to follow my market more closely and see how many "over asking price" offers are actually closing/selling significantly higher than list price.

[Susie]

kadams767 , we thought about having the house appraised, but ultimately decided not to.  At $450-500 a pop, they add up, and we already paid $475 for the one on our purchase, we might have it redone with newer comps before closing if we think it might close the gap, and the idea of a 3rd on our sale just for information purposes feels like bleeding cash.  Plus IDK if it would solve the issue.  The problem isn't so much that buyers are stamping their feet on principal about paying more than it appraises for, it's more that they're all first time homebuyers who don't have the savings to come up with any extra cash to cover any gap at all.  That is what is driving all this defensive maneuvering about the appraisal, they don't want to be contractually obligated to come up with cash to close that they don't have.  From what I understand from people in the industry, it's not happening so much at the "upgrade house" price point.  

Appraisals can vary just enough depending on who does it, and precisely when, and based on which comps, that preemptively appraising doesn't alleviate their fear.  It's all about what their lender's appraisal comes in at, because that's what dictates cash required to close.  I have felt like basically all of our buyers shouldn't be buying a house right now!  Wait til the market settles down, prices drop, and you have more cushion!  Nobody would get MM's stamp of approval to proceed.  But I need to sell to somebody!

ETA:  purplepenguin7 , I am also very curious about how asking / contract / final sale prices are looking.  I am able to search asking vs. final sale price, but the variable I can't find is contract price.  Houses are almost all selling above asking, but IDK if people are getting their contract prices.  I also am not sure whether there are sellers' concessions involved that undercut the listed final sale price.

Our purchase:  asking $429,900 / contract $450k / anticipate selling for $450k


Originally asked $479,900.  Reduced after 2 weeks to $439,900 / Final sale price $458,500, closed 4/20/21


Asked $430k / Final sale price $455k on 4/13/21


Sold before print - $445k, closed 5/4/21


Asked $359,900 / final sale $376k on 4/16/21


Asked $289,999 / final sale $311k on 4/20/21

[kadams767]

I agree with your assessment re: first-time buyers. Knowing your area generally, it is a little crazy to me that that seems to be a price point for a lot of first time buyers. You seem to have gotten a perfect storm of some buyers with champagne taste on a beer budget, so to speak.

[simpsongal]

May 6, 2021 12:02:19 GMT -5 kadams767 said:

I agree with your assessment re: first-time buyers. Knowing your area generally, it is a little crazy to me that that seems to be a price point for a lot of first time buyers. You seem to have gotten a perfect storm of some buyers with champagne taste on a beer budget, so to speak.

Too much HGTV!  It's seriously crazy - I do watch those shows and think there are signs these folks are in way over their heads.  Maybe there's family money but late 20 something SAHM and a [insert generic job that makes $60K/yr] purchasing a first time home for $550K..... 

Also this is giving me flashbacks to my brother buying his $500K house w/$25K given to him after my grandpa died and another $25K he cash out of his retirement (basically ALL of his retirement).  He was 32 at the time and still has no retirement or other savings.  The story gets worse, but you get the gist.

[dutchgirl678]

I also think part of it has to do with this attorney review phase. I don't recall having to do that in our state, so is it something specific to your state? I am sorry this is giving you so much stress. I hope you can come to an agreement with these buyers even if the appraisal comes back lower than their offer. It sucks if it is not the full amount that they offered originally, but like you said you are likely to run into the same issue with other buyers.

[tacoflavoredkisses]

Susie we believed a buyer when we were told he wanted an inspection just because he lives out of state and “he needed a house to move to, no way is he gonna walk!”

Spoiler: he walked and said the inspection indicated we have a “cancer causing pipe” in our house.

Extra spoiler: the report didn’t say anything of the sort.

I know I told you via PM that we had a smooth experience with the VA buyer, which has changed my view on them. But I’m so sorry you’re having such a hard time

[Susie]

May 6, 2021 12:45:02 GMT -5 dutchgirl678 said:

I also think part of it has to do with this attorney review phase. I don't recall having to do that in our state, so is it something specific to your state? I am sorry this is giving you so much stress. I hope you can come to an agreement with these buyers even if the appraisal comes back lower than their offer. It sucks if it is not the full amount that they offered originally, but like you said you are likely to run into the same issue with other buyers.

IDK if it's specific to NY, because I've only ever bought or sold property in NY, and H & I are both NY admitted attorneys.  It really is messy though.  It's part of the standard contract form:

19. ATTORNEY APPROVAL
This agreement is contingent upon Purchaser and Seller obtaining approval of this agreement by their attorney as to all matters, without limitation. This contingency shall be deemed waived unless Purchaer's or Seller's attorney on behalf of their client notifies ____________________ in writing, as called for in paragraph "23", of their disapproval of the agreement no later than ___________. If Purchaser's or Seller's attorney so notifies, then this agreement shall be deemed cancelled, null and void, and all deposits shall be returned to the Purchaser.

So basically the agents and parties hash out an agreement, offer gets verbally accepted and gets signed, but then if for any reason either party is feeling some remorse or whatever, they can just have their attorney disapprove the contract by the date, and they can peace out. The attorneys read the agreement with fresh eyes, without having been part of the negotiations that led to it.  Whatever intent or representations were expressed by the agents and/or parties during offer negotiation/acceptance fly out the window.  Then the attorneys may want to show "value add" for their clients so they create contingencies, etc. to "protect their clients" that weren't discussed in original negotiations.  Their clients think, awesome!  It's so great to have someone looking out for me like this!  But from the other side, it's like no, you can't ask for that now, after we've already settled on a key term (like price)!  It's incredibly inefficient and frustrating.

[origami]

That attorney review process sounds exhausting. I’m sorry. I think it’s a good thing you went with the buyers who were most excited about your house. They’re very likely not going to want to walk away from this sale any more than you do. The last house I sold (2013) had a low appraisal and I’m still not over it, so I completely understand how upsetting this all is. But at least you will get over asking, and it’s very possible you could get $5k over appraisal, which in the grand scheme of things is outstanding. Fingers crossed your appraisal comes back higher than you’re expecting. You had 3 bids at the same amount so that’s a really hopeful sign that it may not come in that far off.

[mrsukyankee]

Susie, I do feel your pain. We had such issues with selling our house and with buying. And we were between houses for 3-1/2 months due to issues on our sellers end (they couldn't move out until the issues with what they were buying were resolved) where we had to live in 3 different temporary accommodations. It turned out to be a 1-1/2 yr process overall, and those on the board through it, can tell you that I was a stressball. I have flatly told my husband that I am not moving again unless it is absolutely necessary (we move overseas or we have to move due to mobility issues).

[heygrey]

Any updates Susie? Hoping it is going along as well as it can for you!

[Susie]

heygrey , I was going to post an update last week, but I felt like I was too enmeshed in all the drama and I'd just wait til it settled a bit.  It's not entirely settled yet, but I'm feeling calmer about it.  Here goes!

On the contract... we still don't have an approved contract.  H and the buyer's attorney had a call about some terms about 2 weeks ago, and they supposedly agreed on the spirit of the language, but he was going to go back to his clients and never came back to us.  We haven't heard from him since.  So it's causing me significant angst that we don't have a legally binding and enforceable contract in place to sell the house (T-8 days until closing on our new house).  Nonetheless, we are going with it for now, because our buyers are acting as though there is a contract.  They've ordered title.  They had the home inspection done last week.  They had the house appraised yesterday.  All those steps cost them money, and they're moving forward.  We've met them in the course of everything going on, and they say this is just a bump in the road and they're still excited to move forward.  We're trying to just trust the process, but a house is a big investment for that approach.

On the inspection... the inspection came back with one major:  mold in the attic.  Thankfully, our buyers are not scared off, and we're working on a resolution that we can all move forward with.  They had a roof guy here on Friday, a mold guy here yesterday, and we had a mold guy here this morning.  Everybody's circling around $4500-$5k worth of work to remediate the mold and deal with the immediate causes.  However, there are a few "buts."  Aren't there always?

The home inspection identified some places where the roof is showing more wear than maybe 2001 roof should have, due to moisture.  It says the roof is fine now, but may need to be replaced in a few (or several, can't remember exact wording) years.  We are worried about what kind of credits the buyers are going to ask for.  We're of course going to remediate the mold and deal with the causes so it doesn't happen again (as best we can ensure), but we didn't offer to sell them a house with a new roof, and we don't plan to now.  We very clearly offered for sale a house with a 20 year old roof.  Hopefully that doesn't become a huge thing.

The other big issue now is that this isn't actually a new problem.  We bought the house in 2008, and our home inspection also showed mold in the attic.  Our sellers hired a company to remediate the mold and re-vent the bathroom fan to the exterior of the house instead of the attic to prevent it from happening again.  They gave us a work proposal and the invoice for the itemized work, including the re-venting.  It turns out the company never re-vented the bathroom fan despite representations otherwise.  The bathroom fan still dumps all the shower steam into the attic.  We never knew because our attic is hard to access (via a hatch in a small closet in our guest room) and I have never actually been up there.  So now we're engaged in discussions with that company, who is still in business, about where we are now.  We have 3 different mold people (ours, theirs, and our sellers'), and it's messy AF.  And frankly just upsetting and stressful.  I'm also just tremendously tired of having people troop through my house.  In the last week alone it's been at least 5-6 professionals of various types.  It's still my home with my little kids.

Finally, the appraisal.  It happened yesterday, and the guy was there for TWO HOURS.  He asked for super detailed lists of what improvements we made in the last 1-5 years, and last 6-10 years, spent an absurd amount of time looking at our landscaping (which is an asset), and doing IDK what else.  I honestly don't know what to think/expect but we should know the final number soon.

Once all the pros have prepared their estimates, and the appraiser submits his report, my expectation is that we'll just address everything together with the buyer's attorney and finalize a contract that comprehensively deals with inspection items and appraisal.  I think in the end it'll be ok, but for now all the unknown -- do we have a contract?  how much are we even just ballpark going to net? -- is killing me.

[hbomdiggity]

Holy crap Susie. Wow.

I will buy you a drink when you get to the other side of this. You deserve it.

[origami]

Needing to replace a roof in a few years doesn't warrant any concession on your part IMO. Fingers crossed the previous contractors will fix this and I’m sorry you’re dealing with so many headaches.

[Susie]

May 18, 2021 13:18:29 GMT -5 origami said:

Needing to replace a roof in a few years doesn't warrant any concession on your part IMO. Fingers crossed the previous contractors will fix this and I’m sorry you’re dealing with so many headaches.

We don't have any realistic hope that they'll make it entirely right, given that 13 years have passed, plus we don't have privity of contract with the company because our sellers engaged them rather than us.  Plus H talked to them on Friday, and since then they haven't returned any calls.

Even if it had been done right, there would be no guarantee that there wouldn't be mold now.  It would at least be less extensive, but hard to conclusively say it could have been entirely prevented.  Unfortunately we now have a real assortment of opinions as to what the real cause of the mold is.  The bathroom fan sure isn't helping.  Neither is insulation that's blocking some of the soffits.  Someone else proposed a 3rd potential source, but I forget what it is.  They're probably all a little right, and who can say which one thing (or two of three) you could fix to get adequate airflow to prevent the issue?  Like I said, it's messy AF.

We're mostly hoping they'll re-vent the fan for free (or rather, for payment previously received), and give us a discount on remediation services required.  I feel that's a reasonable ask.  But we'll see.

[aspentosh]

I... goodness... I have no words, Susie. I am so sorry you're in this boat.

I agree that no concessions need to be made for the roof since you didn't try to say it was newer than it was. But really, I just hope it's fixed quickly and your buyers aren't crazy cakes.

[nicolewi]

Wow, Susie, I am so sorry that this has been such a nightmare. I hope you come out the other side soon!

[Susie]

Thanks, I appreciate being able to vent here as we go through this. Hopefully our process helps someone else avoid some of the pitfalls we're running into!

The remediation company that did the work (or part of it) in 2008 is coming tomorrow morning to take a look. We'll see where it ends up.

On the bright side today we got our clear to close on our purchase. Closing is set for next Wed at 1pm, right on time per the original contract closing date. That's how I like it!

[heygrey]

Wow. I feel like you are winning an award that no one wants of most complicated sale ever.

I don't think you need to offer any concessions on the roof. In general, they have a 20-30 year lifespan depending on the product. As a buyer I would mentally earmark money for a replacement in the 1-5 year range and consider myself lucky if it lasted longer.

[libbygrl109]

I am so sorry that you are uncovering so much craziness. It makes me wonder what else has gotten botched up in the years before we bought our house (we've already uncovered a ton, and I am sure will find more when we start our kitchen). At least you have your closing - definitely a bright spot!

[mrsukyankee]

Glad to hear that you are closing and hoping that your next steps moving forward on selling are far less dramatic!

[atarianna]

Susie how did the appraisal come in? I’ve been following your story since the beginning and am so curious.

[Susie]

atarianna, still waiting! Still waiting on the mold remediation company that did the 2008 work too; they pushed from last Wed. to this Mon. All the waiting is getting to me. Like are we selling this house or aren't we?

Amid the 46,000 things I need to do, I'm still halfway keeping up the gardens our yard because I'm afraid this sale is going to fall through and we'll have to re-list it, so it'll need to look sharp. If that worst case scenario comes to pass, my biggest hope is that we can be moved into the new house first (timing on that is mostly dependent on the floor finishing timeline) so we don't have to live through the showings and then all the inspections/appraisals/etc. all over again. I'm tired of feeling like I live in a fishbowl.

[Susie]

🚨 good news alert 🚨

(I think this is a first in this thread, lol.)

1. It seems OUR HOUSE APPRAISED! Omg. I thought this was a longer shot than our purchase appraising, and our purchase appraisal came up $15k shy. Our agent just talked to the appraiser though, and he told her he managed to get to the number. Incredible.

2. The company that did the mold remediation in 2008 came out today, and has an estimate to us already. $3400, all in. H said there were a number of “no charge” items on the estimate. Good, as well there should be. Our other estimates were $4500-5000 (buyer’s guy), and $6500 (a guy our agent rec’ed), so $3400 sounds pretty good to me.

Hopefully with this info we will be able to streamline discussions with the buyers’ attorney and we can get the contract approved. We can take out all the appraisal related contingencies that we’d been back and forth on, since they’re now moot.

[aspentosh]

Yay, Susie! I am so happy for you!!!!!!!!